North Korean Economy Watch

UPDATE: UN World Health Organization has criticized the Amnesty report.  According to the Associated Press:

The World Health Organization found itself Friday in the strange position of defending North Korea’s health care system from an Amnesty International report, three months after WHO’s director described medicine in the totalitarian state as the envy of the developing world.

WHO spokesman Paul Garwood insisted he wasn’t criticizing Amnesty’s work, but the public relations flap illustrated an essential quandary for aid groups in unfree states: how to help innocent people without playing into the hands of their leaders.

Amnesty’s report on Thursday described North Korea’s health care system in shambles, with doctors sometimes performing amputations without anesthesia and working by candlelight in hospitals lacking essential medicine, heat and power. It also raised questions about whether coverage is universal as it — and WHO — claimed, noting most interviewees said they or a family member had given doctors cigarettes, alcohol or money to receive medical care. And those without any of these reported that they could get no health assistance at all.

Garwood said Thursday’s report by Amnesty was mainly anecdotal, with stories dating back to 2001, and not up to the U.N. agency’s scientific approach to evaluating health care.

“All the facts are from people who aren’t in the country,” Garwood told reporters in Geneva. “There’s no science in the research.”

The issue is sensitive for WHO because its director-general, Margaret Chan, praised the communist country after a visit in April and described its health care as the “envy” of most developing nations.

Major global relief agencies have been quietly fighting for years to save the lives of impoverished and malnourished North Koreans, even as the country’s go-it-alone government joined the exclusive club of nuclear weapons powers and wasted millions on confrontational military programs.

Some groups may fear being expelled from the country if they are openly critical of Pyongyang, which is highly sensitive to outside criticism. Still, Chan’s comments were uncommonly ebullient.

Garwood and WHO spokeswoman Fadela Chaib insisted that Amnesty’s report was complementary to their boss’ observations, and sought to downplay Chan’s praise for North Korea. Instead, they focused on the challenges she outlined for North Korea, from poor infrastructure and equipment to malnutrition and an inadequate supply of medicines.

But whereas Chan had noted that North Korea “has no lack of doctors and nurses,” Amnesty said some people had to walk two hours to get to a hospital for surgery. Chan cited the government’s “notable public health achievements,” while Amnesty said health care remained at a low level or was “progressively getting worse.”

Asked Friday what countries were envious of North Korea’s health, Chaib said she couldn’t name any. But she highlighted the importance of maintaining the health body’s presence in the country, where officials do their best to save lives despite “persisting challenges.”

“We are an organization dealing with member states, and we respect the sovereignty of all countries,” Chaib said. “We need to work there to improve the lives of people.”

Sam Zarifi, head of Amnesty’s Asia-Pacific program, said the human rights group stood by its findings.

“We certainly have a lot of restrictions in terms of working in North Korea, but we did our best in terms of capturing the information we could verify,” Zarifi said. “We don’t take the WHO’s statements as criticizing or rejecting Amnesty’s findings.”

He said Amnesty had spoken to North Koreans as well as to foreign health care and aid workers, and relied heavily on WHO for information — including the assessment that North Korea spends $1 per person per year on health care, the lowest level in the world.

The U.N. estimates that 8.7 million people need food in North Korea. The country has relied on foreign assistance to feed much of its population since the mid-1990s when its economy was hit by natural disasters and the loss of the regime’s Soviet benefactor.

North Korea, ruled by Kim Jong Il, is routinely described by U.N. and other reports as one of the world’s most repressive regimes.

Garwood said Amnesty’s research added a needed element to understanding health conditions in North Korea, but added that it didn’t even mention recent improvements in the country as the result of a program funded by South Korea and aided by WHO.

The U.N. body claims that maternal mortality has declined by over 20 percent since 2005, and diarrhea cases and deaths in operations have also dropped. It says more than 6,000 doctors and nurses have been trained in emergency obstetric care, newborn care and child illnesses, while clinics have received better material for operations, blood transplants and other medical interventions.

As for Chan’s April claim that “people in the country do not have to worry about a lack of financial resources to access care,” Garwood said hundreds of field missions have been conducted in North Korea.

“None have come back reporting the kinds of things in the Amnesty report in terms of payment for services,” he said.

“I’m not saying they’re not credible accounts,” he added. “But it’s not taking into account some of the things that are happening today.”

Zarifi, of Amnesty, said the whole debate would be ended if North Korea’s government provided access to monitors so that everyone had a better understanding of the country’s health care system.

“Every indication we have indicates the state of health care in North Korea is dire,” he said.

ORIGINAL POST: Here is the introduction to the report (which you can download here as a PDF):

In the early 1990s, the Democratic People’s Republic of Korea (DPRK or North Korea) faced a famine that killed up to one million people in a population that at the time hovered around 22 million (the current population stands at 23.9 million). Food shortages and a more general economic crisis have persisted to this day. The government has resolutely maintained that it is committed to, and capable of, providing for the basic needs of its people and satisfying their right to food and a proper standard of health. The testimonies presented in this report suggest otherwise. The people of North Korea suffer significant deprivation in their enjoyment of the right to adequate health care, in large part due to failed or counterproductive government policies. These poor policies include systematic failure to provide sufficient resources for basic health care (North Korea had one of the lowest levels of per capital funding for health care recorded by the World Health Organisation in 2006). After nearly two decades, food insecurity remains a critical concern for millions of North Koreans. This has been compounded by the government’s reluctance to seek international cooperation and assistance, which the government is obligated to do when it would otherwise be unable to ensure minimum essential levels of food for the whole population, and its restrictions on the delivery of humanitarian assistance. This delayed and inadequate response to the food crisis has significantly affected people’s health.

Additionally, a currency revaluation plan in November 2009 caused spiralling inflation that in turn aggravated food shortages and sparked social unrest. In the first few months after the plan went into effect, the North Korean government exacerbated the situation by restricting the use of foreign currency, closing down food markets, and prohibiting small-plot farming. Many people died of starvation and many others lost their entire savings.

Amnesty International has documented how widespread and chronic malnutrition, which suppresses people’s immune system, has triggered epidemics and mass outbreaks of illnesses related to poor diet. Interviews with North Koreans depict a country that professes to have a universal (free) health care system but in reality struggles to provide even the most basic service to the population. Health facilities are rundown and operate with frequent power cuts and no heat. Medical personnel often do not receive salaries, and many hospitals function without medicines and other essentials. As doctors have begun charging for their services, which is illegal under North Korea’s universal health care system, the poor cannot access full medical care, especially medicines and surgery.

The interviews conducted by Amnesty International indicate that the North Korean government has also failed its obligation to provide adequate public health information. As a result, most of the interviewees were unaware of the importance of seeking proper medical diagnoses or completing a course of medication. And, because many hospitals no longer supply free services or medicines (despite government commitments to the contrary), many people normally do not visit doctors even when they are ill.

In a 2004 report, Starved of Rights: Human rights and the food crisis in the Democratic People’s Republic of Korea (North Korea), Amnesty International documented actions of the North Korean government that aggravated the effects of the famine and the subsequent food crisis, including denying the existence of the problem for many years, and imposing ever tighter controls on the population to hide the true extent of the disaster from its own citizens. It also documented the government’s refusal to allow swift and equitable distribution of food and its imposition of restrictions on freedom of information and movement, which exacerbated the population’s ability to search for food.3 Although some progress has been made since 2004, access to food is still a critical issue in North Korea. As this report demonstrates, the inadequate and sometimes counter-productive actions of the North Korean government over the country’s food crisis have had a devastating impact on the health of the population.

Under international law and standards, North Korea is obligated to protect the rights of its population to the highest attainable standard of health. This means that, at the very least, the state must provide for adequate health care and the underlying determinants of health, including food and nutrition, housing, access to safe and potable water and adequate sanitation, safe and healthy working conditions, and a healthy environment. North Korea’s responsibilities under international and domestic law will be addressed in greater detail in section 5.

To improve the situation, Amnesty International presents the following key recommendations to the government of the Democratic People’s Republic of Korea with more detailed recommendations in the conclusion of this report.

Amnesty International calls on the North Korean government to:

1. as a matter of priority, ensure that food shortages are acknowledged and effective steps taken to address these shortages, including acceptance of needed international humanitarian assistance;

2. ensure the need-based and equitable distribution of health facilities, goods and services throughout the country;

3. co-operate with the World Food Programme and donors, allow unrestricted access to independent monitors, and ensure non-discrimination, transparency and openness in the distribution of food aid;

4.ensure that medical personnel are paid adequately and regularly so that they may carry out their duties properly;

5. undertake information and education campaigns to provide accurate and comprehensive information on prevalent infections and diseases; their causes, symptoms and treatment; and the importance of medical diagnosis and effective use of medicines.

Furthermore, Amnesty International recommends to the international community, and in particular, major donors and neighbouring countries such as China, Japan, Russian Federation, South Korea and US to:

1. ensure that the provision of humanitarian assistance in North Korea is based on need and is not subject to political conditions.

This report has received wide coverage in the media.  Here are the links:

Barbara Demick, Los Angeles Times

Choe Sang-hun, New York Times

Yonhap

BBC

Barbara Demick wrote an interesting piece in the New Yorker this week which captures first-hand stories about how the DPRK’s currency reform affected local families (not well).

Here is her article in PDF format.

Last month the Frontline Club (London) hosted a panel discussion on the DPRK.  Participants included:

Vitit Muntarbhorn, former UN Special Rapporteur on situation of human rights in North Korea;
Lord Alton of Liverpool, chair of the all party parliamentary group for North Korea;
Professor Hazel Smith, professor of security and resilience at Cranfield University
Park Ji-hyun, refugee from Chongjin

The panel took place on June 21 and you can watch it here.

Thanks to a feline friend for the link.

I have previously posted about residential construction in the DPRK in Ryongchon (here) and Pyongyang (here and here).

Apparently Hamhung is on the government’s list of urban areas that need to be rebuilt. KCNA reported on May 2o:

After touring Hamhung City, [Kim Jong-il] examined a miniature of the city construction layout plan and other plans for the development of major economic fields in South Hamgyong Province and guided the work in this domain on the spot.

Underscoring the need to build Hamhung City under a long-term plan by thoroughly applying the socialist principle, the principle of popular character as it is the industrial city with a large number of workers, he specified the orientation and ways to do so.

Here is a photo of Kim Jong-il inspecting that very miniature mentioned in the KCNA piece.

Click image for larger version

Here is a Google Earth satellite image of this same area as it appears today–taken from the same angle:

The ghost of Ceauşescu is lurking.  Who knows if they will ever get around to completing this task, but it is apparent they intend to remake Hamhung in the image of Kwangbok Street or Rakrang in Pyongyang.

Jane Jacobs is rolling in her grave.

To the American readers I wish you a happy July 4th weekend.  I have already read the Declaration of Independence today and plan on doing some scuba diving and spear fishing this weekend.  For readers in other countries, have a great weekend.

 The signing of the Declaration of Independence was portrayed well in the HBO series John Adams.  See it here.

According to the Daily NK:

Japan’s Supreme Court has ruled that Chongryon headquarters are a legitimate Chongryon asset which may be seized and auctioned as part of proceedings to recover loans made by a defunct credit union to the organization, Japanese broadcaster NHK reported on Tuesday.

A collection agency recently took over a number of bonds issued by the bankrupt Joeun Credit Union, which loaned around $700 million to Chongryon, the organization of North Koreans in Japan. The agency then announced its intention to pursue collection by putting Chongryon headquarters land and buildings in the Chiyoda district of Tokyo up for auction.

However, since the land and buildings are registered under a separate firm, Chosun Central Hall Management Association, the collection agency was required to file a lawsuit to get the necessary recognition of its right to seizure.

The court initially dismissed the collection agency’s claim on the grounds that the assets are held by a separate entity, but accepted, “It is possible to seize (the assets) if they can be shown to be actual Chongryon assets.”

Therefore, the collection agency filed a separate lawsuit to ask for recognition of the Chongryon headquarters estate and buildings as such an asset, and the Supreme Court has now ruled in its favor.

If the judgment is allowed to stand, the collection agency will be able to legally seize the estate and buildings of the Chongryon headquarters, adding to the organizations mounting woes.

Read the full story here:
Chongryon HQ on Block after Ruling
Daily NK
Yang Jung A
6/30/2010

According to KCNA:

WPK Conference to Be Convened
Pyongyang, June 26 (KCNA) — The Political Bureau of the Central Committee of the Workers’ Party of Korea on June 23 released a decision on convening a conference of the WPK.

The decision says:

All the Party members, servicepersons and people are now waging a dynamic general offensive full of conviction of certain victory and optimism to glorify this year marking the 65th anniversary of the WPK as a year of great changes to be specially recorded in the history of the country with the great pride and self-confidence of holding General Secretary Kim Jong Il in high esteem at the highest posts of the WPK and the revolution.

The WPK founded by President Kim Il Sung and led by Kim Jong Il has steered the sacred Korean revolution to one victory after another in its annals for more than six decades, building a socialist power, independent in politics, self-supporting in economy and self-reliant in national defence, on this land and ushering in a new era of prosperity.

We are now faced with the sacred revolutionary tasks to develop the WPK, organizer and guide of all victories of the Korean people, into an eternal glorious party of Kim Il Sung and further increase its militant function and role to glorify the country as a great prosperous and powerful socialist nation.

The Political Bureau of the WPK Central Committee decides to convene early in September, Juche 99 (2010) a conference of the WPK for electing its highest leading body reflecting the new requirements of the WPK and the developing revolution in which decisive changes are taking place in the efforts to accomplish the revolutionary cause of Juche, the cause of building a prosperous and powerful socialist nation.

According to the New York Times:

The impending shuffle in the party leadership follows personnel changes in the military and the powerful National Defense Commission in the past year. The North’s rubber-stamp Parliament met this month to replace several cabinet members and appointed Mr. Kim’s brother-in-law, Jang Song-taek, to the No. 2 post at the defense commission. Mr. Jang is seen as a potential caretaker for Mr. Kim’s son.

According to the Choson Ilbo:

Key members of the North Korean Workers Party meet in September for the first time in 44 years, the North’s official Korean Central News Agency said Saturday. The meeting was called by the Politburo and has raised expectations that leader Kim Jong-il’s son Jong-un will be officially named as his father’s successor.

According to party regulations, leading members are to meet between regular party meetings, which are held every five years to decide on key policies, but the last time that happened was in 1980, when it appointed Kim Jong-il, then the heir apparent, as member of the standing committee of the Politburo, supreme member of the party and also its military committee, officially anointing him as successor to Kim Il-sung.

North Korean Leadership Watch has more.

UPDATE: The Bank of Korea has published a report in English.  You may download it here (PDF).  This has also been added to my “DPRK Economic Statistics” page where you can find Bank of Korea data from previous years as well as all sorts of other data sources. (hat tip to a respected reader)

ORIGINAL POST: According to the Assocaited Press:

North Korea’s state-controlled economy, already just a fraction of its southern rival, shrank last year as a severe winter decimated crops and shortages of raw materials and electricity hindered manufacturing.

South Korea’s central bank in a report released Thursday estimated that North Korea’s economy contracted 0.9 percent — the third time in the past four years the impoverished economy has gotten smaller. It grew 3.1 percent in 2008.

The bank said the North’s economy faced “many difficulties” amid strengthened sanctions and reduced assistance. North Korea is under heavy international sanctions related to its nuclear and missile programs.

The size of the North’s economy was estimated at 28.6 trillion South Korean won ($24.2 billion), or just 2.7 percent that of the South’s.

The Bank of Korea has published estimates of North Korea’s economic performance since 1991. Gauging the extent of activity, however, is difficult as the secretive country does not publish economic statistics.

Despite its troubles, the North has set an objective of achieving the status of a “powerful and prosperous nation” in 2012, the 100th anniversary of the birth of the country’s founder, Kim Il Sung, father of leader Kim Jong Il.

The two Koreas, which fought the 1950-53 Korean War, have taken divergent economic paths. The capitalist South embraces the free market and has grown to be world’s 15th-largest economy.

North Korea’s largely top-down, command-style economy has lagged far behind. The collapse of the Soviet Union, a key source of trade, and a series of natural disasters combined with economic mismanagement in the 1990s led the country to experiment in recent years with limited market reforms and to seek more foreign investment, mostly from China and South Korea.

But tensions over the country’s missile and nuclear programs, the shooting death of a South Korean tourist and the sinking of a South Korean warship that Seoul has blamed on Pyongyang have caused trade and joint economic projects with the South to wither.

A currency reform last year was seen by experts as a botched attempt to cool inflation. The move reportedly sparked anger among citizens stuck with piles of worthless bills.

“The negative economic growth in 2009 was mainly attributable to decreased agricultural production due to damage from particularly severe cold weather and sluggish manufacturing production owing to a lack of raw materials and electricity,” the Bank of Korea said.

North Korea, with its weak infrastructure, is highly dependent on the whims of Mother Nature. Good weather can boost agriculture output as it did in 2008 and contribute to growth. Bad weather, however, in the form of heavy rains and flooding, can prove disastrous.

The country has faced a chronic food shortage since natural disasters and mismanagement devastated the economy in the mid-1990s.

Agriculture, forestry and fisheries contracted 1 percent in 2009 primarily because of the cold weather, the BOK said. Mining output declined 0.9 percent, while manufacturing shrank 3 percent. Heavy industry output declined 3.5 percent.

On the positive side, construction increased 0.8 percent led by housing and civil engineering, according to the BOK.

I have only been able to locate the report in Korean.  You can download a PDF of it here. I have added it to my DPRK Economic Statistics page.

The Bank of Korea web page is not very user friendly and I have no idea how to link directly to the report.  However, if you would like to download your own verision from there, look for this link on the main page: 2009년 북한 경제성장률 추정결과-보도자료.  This will take you to the report.

Read the full story here:
Bank of Korea: NKorean economy shrank in 2009
Associated Press
6/24/2010

According to the Daily NK:

North Korea has earned more than $160 million in the last ten years thanks to the construction of sculptures and other edifices in countries across Africa.

A Daily NK source in China revealed on the 18th, “Since 2000, North Korea has been earning colossal quantities of dollars through contracts for the Mansudae Overseas Project Group of Companies under the Mansudae Art Institute to construct sculptures.”

Mansudae Art Institute is an organization primarily dedicated to the idolization of Kim Il Sung and Kim Jong Il through public works, one whose construction of edifices such as the Juche Tower and Arch of Triumph in Pyongyang has added to the status of the country.

It has also been building revolutionary monuments in African countries such as Ethiopia since the 1970s in order to maintain cordial relations with socialist states, but in the early 2000s started doing work in African countries to earn foreign currency as well.

According to the source, North Korea has earned $66.03 million from Namibia alone thanks to the construction of the Presidential Palace ($49 million); the Cemetery of National Heroes ($5.23 million); a military museum ($1.8 million); and Independence Hall ($10 million).

It has also earned almost $55 million from Angola via the António Agostinho Neto culture center ($40 million); Cabinda Park ($13 million); and the Peace Monument ($1.5 million).

Additionally, the North has constructed a basketball stadium ($14.4 million) and an athlete academic center ($4.8 million) in the Congo, earning almost $20 million dollars in total.

Thanks to the Monument to the African Renaissance in Senegal, the North has made another $12 million dollars.

There are around 19.8㎢ set aside for a vacation spot for the president of Equatorial Guinea, which is supposed to earn Mansudae around $800,000, not to mention a government office building ($1.5 million), Luba Stadium ($6.74 million) and conference halls ($3.5 million).

The source also reported, “The money earned from these construction projects is managed by the No. 39 Department. Some of these dollars are used for domestic governance, while the rest go to secret accounts in Switzerland or Macau to become Kim Jong Il’s secret funds.”

Here are the images from the story including a table of financial data (which I would take with a grain of salt):

Additional Information:

1. I blogged here about the Derg Monument in Ethiopia.

2. I have located some of the Mansudae Overseas projects mentioned in this story (as well as numerous other places not menioned in this story: Egypt and Syria, Zimbabwe, DR Congo). However, here are GeoEye satellite images of some of the Namibia and Angola projects mentioned above courtesy of Google Earth:  

Namibia National Heroes Acre (22°39’46.02″S,  17° 4’41.06″E):

Namibia State House (22°35’28.83″S,  17° 6’2.76″E)

Cultural Center of António Agostinho Neto (Mausoleum) (8°49’24.73″S,  13°13’8.52″E)

The North Korean government’s attempt to regulate and close wholesale markets has been well documented.  Reports at the time had indicated inconsistent levels of success.  If recent reports are true, however, market participants might have won a temporary reprive from Pyongyang’s edicts.  But the North Korean government might have successfully closed one market in the town of Nyongwon(녕원: 39.8288444°N, 126.5459556°E), or at least forced it to temporarily relocate, by flooding it.

The problem seems to have been caused by the water level maintained by the Taedong River Dam in Tokchon (덕천).  Maybe the level of water in 2007 was unusually high.  There do appear to be several other facilities that are flooded.  However, we do not have enough satellite imagery to determine what happened.

On a more positive note, we do have satellite imagery of the formalization of the Sinsang Market (신상: 39.6518138°N, 127.4163115°E).

The latter image above was taken on Christmas Eve 2007.

Pyongyang’s Hyongjiesan Market (형제산구역: 39.0539763°N, 125.7224°E) seems to have sprung up in one place but was temporarily relocated to a more formal facility before moving back to its original location. I do not know how to explain these moves.

Pyongyang’s Sadong Market (39.0035985°N, 125.824281°E):

Here is a clandestine video of the Sadong Market (Filmed in January 2009).

And what does the North Korean government think of these markets?  They are not happy with them.  This BBC video clip does not offer much new information about the DPRK but it does deliver at least one  official willing to be interviewed on the DPRK’s economic policies (at the 11:50 mark).